Carlile v. Reliance Standard Life Insurance et al
Filing
57
MEMORANDUM DECISION AND ORDER: The court DENIES 50 Defendants' Motion to Alter or Amend the April 29, 2019 Memorandum Decision and Order, and Judgment in a Civil Case. Signed by Judge Robert J. Shelby on 7/25/19. (dla)
IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF UTAH
DAVID G. CARLILE,
Plaintiff,
MEMORANDUM DECISION AND
ORDER
v.
RELIANCE STANDARD INSURANCE
COMPANY and RELIANCE
STANDARD LIFE INSURANCE
POLICY NUMBER LTD 123420,
Case No. 2:17-cv-1049
Chief Judge Robert J. Shelby
Defendants.
Magistrate Judge Evelyn J. Furse
Before the court is Reliance Standard Life Insurance Company’s (Reliance) and Reliance
Standard Life Insurance Policy Number LTD 123420’s (the Policy) Motion to Alter Judgment. 1
For the reasons articulated more fully below, Defendants’ Motion is DENIED.
On April 29, 2019, the court issued an Order 2 and Judgment 3 against Defendants. In its
Order, the court granted Plaintiff David Carlile’s Motion for Summary Judgment 4 on the grounds
Defendants improperly denied his claim for long-term disability benefits. 5 The court further
concluded that, as a remedy, it was unnecessary to remand the case back to Defendants.
Accordingly, the court made an award of benefits to Carlile. The court’s determinations on these
1
Dkt. 50.
2
Dkt. 46.
3
Dkt. 47.
4
Dkt. 33.
5
Dkt. 46 at 12.
1
issues resulted in a denial of Defendants’ Motion for Summary Judgment. 6 Defendants now
move the court to amend the Order and Judgment based on three theories. 7 First, Defendants
argue the Order was contrary to controlling Tenth Circuit precedent. 8 Second, Defendants argue
the Order was in clear error in failing to apply the plain language of the Policy. 9 And third,
Defendants argue the case must be remanded for further review of the claim to determine if any
benefits are owed. 10
I.
Legal Standard
Under Federal Rule of Civil Procedure 59(e), a motion to alter or amend judgment may be
granted when “the court has misapprehended the facts, a party’s position, or the controlling
law.” 11 “[O]nce the district court enters judgment, the public gains a strong interest in protecting
the finality of judgments.” 12 A motion to alter or amend a judgment may be based only on “(1)
an intervening change in the controlling law, (2) new evidence previously unavailable, [or] (3)
the need to correct clear error or prevent manifest injustice.” 13 Such motions are “not
appropriate to revisit issues already addressed or advance arguments that could have been raised
prior to the entry of judgment.” 14
6
Dkt. 35.
7
Dkt. 50.
8
Id. at 4.
9
Id. at 7.
10
Id. at 8.
11
Nelson v. City of Albuquerque, 921 F.3d 925, 929 (10th Cir. 2019) (citation omitted).
12
Id.
13
Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000).
14
Nelson, 921 F.3d at 929 (quoting Servants of Paraclete, 204 F.3d at 1012) (internal quotation marks omitted).
2
II.
The Court Did Not Ignore Tenth Circuit Precedent
Defendants argue the Tenth Circuit decision in Bartlett v. Martin Marietta Operations
Support, Inc. Life Ins. Plan 15 is binding precedent the court ignored in its decision. 16 This is not
so.
The Tenth Circuit, in Bartlett, confronted a “unique set of circumstances” concerning which
of two benefit plans the plan administrator could consider for purposes of paying or denying plan
benefits. 17 Bartlett was given the option to elect into a new employee benefits plan. 18 Prior to
making his election, Bartlett was provided an employee flex benefits workbook which explained
he would be eligible for plan benefits as long as he was employed as a “regular full-time
employee.” 19 After electing to obtain life insurance benefits through the plan, Bartlett was
diagnosed with cancer and was unable to return to work before his death. 20 After his death,
Bartlett’s wife sought payment of the life insurance benefits. 21 The plan administrator denied
payment of plan benefits, relying on language in the summary plan description which was
printed after Bartlett’s death—and not in the flex benefits workbook. 22 The summary plan
description required employees to be “regular full-time active employees.” 23 The plan
administrator determined that because Bartlett was not “active” at work at the time of his death,
15
38 F.3d 514 (10th Cir. 1994).
16
Dkt. 50 at 4.
17
Bartlett, 38 F.3d at 518.
18
Id. at 516.
19
Id.
20
Id.
21
Id.
22
Id.
23
Id.
3
he was not eligible for benefits. 24 Bartlett’s wife brought suit under ERISA claiming the
administrator improperly relied on the language in the summary plan description. 25 On appeal,
the Tenth Circuit was called upon to determine whether the summary plan description or the flex
benefits workbook constituted the benefit plan that governed the issuance of plan benefits. 26 In
addressing the issue, the Tenth Circuit explicitly limited its holding to the unique facts of the
case. 27 Namely, “the drafting of the workbook and the timing of the publication of the summary
description, as well as the circumstances of the decedent's death.” 28 The Tenth Circuit then
concluded the workbook, and not the summary plan description, constituted the benefit plan for
issuance of Bartlett’s benefits. 29 The Tenth Circuit then determined Bartlett was eligible for
benefits because under the terms of the workbook he was a “regular full-time employee” at the
time of his death. 30 After reaching this conclusion, however, the Tenth Circuit stated that
Bartlett’s condition could disqualify him “from being actively working” if the language of the
summary plan description were to have applied at the time of his death. 31
This case does not present the unique circumstances that existed in Bartlett. This case does
not involve the drafting of a workbook, the timing of the publication of the summary plan
description, or circumstances regarding the death of a Plan beneficiary. The Tenth Circuit
24
Id.
25
Id.
26
Id. at 517.
27
Id. at 518.
28
Id.
29
Id.
30
Id. at 519.
31
Id.
4
expressly limited its holding to these specific facts. The holding in Bartlett is thus not
controlling precedent for this case.
Even if the court believed Bartlett set a precedential standard for this case, however, the court
considers Defendants’ reliance on Bartlett to be unavailing. Defendants argue that Bartlett
stands for the proposition that including the term “active” in a Plan limits the payment of benefits
to “regular full-time employees who were actively working.” 32 The court disagrees with
Defendants’ statement of the case. The issue before the Tenth Circuit was not whether the term
“active” would limit payment of benefits. Rather, the concern was which of two plans governed
the issuance of benefits. Because the Tenth Circuit concluded the flex benefits workbook
governed the payment of benefits, any assessment of the term “active” in the non-governing
summary plan description is dicta. 33 And this court is “bound by holdings, not dicta.” 34
III.
The Order Does Not Contain Clear Error Interpreting the Plain Language of the
Plan
In the Order, the court construed Defendants’ denial of Carlile’s claim to be based on the fact
that Carlile was not an active employee. In the denial letters sent to Carlile, Defendants stated,
“[t]o be deemed an active employee, you must have been working minimally 30-hours per
week.” 35 The denial letters integrated the minimum hour requirement from the definition of
“Full-time” to alter and attempt to breathe life into the term “active.” 36 Under this
32
Dkt. 50 at 6.
33
Tokoph v. United States, 774 F.3d 1300, 1303 (10th Cir. 2014), as amended on reh'g (Jan. 26, 2015) (stating “dicta
are statements and comments in an opinion concerning some rule of law or legal proposition not necessarily
involved nor essential to determination of the case in hand”).
34
Id.
35
JAR at LTD103 (Dkt. 34-1 at 104) (emphasis in original).
36
In the Order, the court states, “the ambiguity of the term ‘active’ is not resolved by reading it in conjunction with
the eligibility provisions definition of ‘Full-time.’” (Dkt. 46 at 11.)
5
interpretation, the court determined the Plan language to be ambiguous and it “construe[d] the
ambiguity against Reliance and in favor of the ‘reasonable expectations’ of Carlile.” 37
Construing the Plan language more liberally, the court still determines denial of coverage
inappropriate. “In interpreting [the plan], we begin with the relevant language. When the terms
of [the plan] are unambiguous, our inquiry is complete, except in rare and exceptional
circumstances.” 38 The Plan defines “Full-time” as “working for . . . a minimum of 30 hours
during a person’s regular work week.” 39 Because the Plan does not define “regular,” the court
must give the term its ordinary meaning. 40 “Regular” is defined as “constituted, conducted,
scheduled, or done in conformity with established or prescribed usages, rules, or discipline;
recurring, attending, or functioning at fixed, uniform, or normal intervals.” 41 Thus, the court
understands “regular” within the Plan to mean the normal state of employment. Under these
circumstances, the normal state of employment was the period of employment preceding
Carlile’s Notice of Termination. The work weeks following the Notice of Termination, during
which Carlile was paid upfront and allowed to work on a voluntary basis, 42 were decidedly
irregular.
Because Defendants misinterpreted the Plan language on eligibility, specifically that a “Fulltime” employee’s hours are counted on a week to week basis rather than based on the normal
work week, they repeatedly focused requests for evidence of hours worked during this irregular
37
Dkt. 46 at 11 (citations omitted).
38
Aulston v. U.S., 915 F.2d 584, 589 (10th Cir. 1990).
39
Id. at LTD9 (Dkt. 34-1 at 10) (emphasis added).
40
Hamilton v. Lanning, 560 U.S. 505, 513 (2010) (quoting Asgrow Seed Co. v. Winterboer, 513 U.S. 179, 187
(1995)).
41
Regular, MERRIAM-WEBSTER.COM (2019), https://www.merriam-webster.com/dictionary/regular.
42
Id. at LTD480 (Dkt. 34-2 at 211).
6
period. 43 As such, Defendants were making requests for evidence—and ultimately formulating a
denial—that were unsupported by the Plan language. Therefore, the court concludes Defendants
inappropriately denied Carlile coverage.
Notwithstanding Defendants’ inadequate factual findings, the court concludes the record
clearly shows Carlile is entitled to benefits. 44 The evidence shows that Carlile’s employer,
Lighthouse Resources, Inc. (LRI), considered Carlile eligible under the Plan as a full-time
employee. LRI responded to Defendants’ inquiries regarding Carlile’s full-time status by stating
that Carlile “ha[d] been eligible [under the Plan] since his DOH with no gaps in coverage,”
indicating LRI indeed considered Carlile a “Full-time” employee as articulated by the Plan. 45
Defendants ignored direct evidence that detailed Carlile’s status as a “Full-time” employee with
LRI and in so doing improperly denied benefits.
IV.
Remand Is Not Necessary for a Determination of Benefits Owed
Defendants move to alter the court’s Order under Rule 59 based on new evidence previously
unavailable and to prevent manifest injustice. 46 The court disagrees. The new evidence
proposed by Defendants relates to whether Carlile was Totally Disabled under the terms of the
Plan. Defendants maintain Carlile was not totally disabled beginning on April 14, 2017, because
he was able to start a new job. 47 This evidence, however, was not previously unavailable.
Carlile applied for long-term disability benefits on October 16, 2016. 48 He filed suit in
September 2017—nearly five months after he allegedly started the new job.
43
See, e.g., id. at LTD99 (Dkt. 34-1 at 100); id. at LTD426–27 (Dkt. 34-2 at 157–58).
44
Weber v. GE Grp. Life Assur. Co., 541 F.3d 1002, 1015 (10th Cir. 2008).
45
JAR at LTD480 (Dkt. 34-2 at 211).
46
Dkt. 50 at 9–11.
47
Id. at 9.
48
Record at STD145 (Dkt. 36-1 at 100).
7
Defendants had ample opportunity to assess whether Carlile satisfied the 90-day Elimination
Period from the time he applied for benefits until the time he filed suit in September, 2017, 49 and
could have presented it as part of the administrative record, but chose not to do so. Defendants
may not prolong litigation by making piecemeal denial of benefits. The evidence was
sufficiently before the Defendants to make a determination on this issue and their “decision to
deny benefits must stand or fall” on the reasons articulated in the administrative record
“alone.” 50
Defendants then argue they would face manifest injustice if required “to pay benefits which
Plaintiff may not be entitled to receive under the terms of the plan.” 51 Defendants insist remand
is necessary to make an eligibility determination, particularly because “the administrator retains
the primary role in making eligibility decisions.” 52 Defendants point to Conkright v.
Frommert 53 in support of their position. The court finds this case distinguishable. Conkright
dealt with the issue of remand when Firestone deference applied to the plan administrator’s
decision regarding eligibility for benefits. 54 Simply put, Defendants’ decisions are not entitled to
Firestone deference. 55 Thus, the issues implicated in Conkright are not applicable to this case,
and no manifest injustice is done by declining to remand the case to Defendants to make other
eligibility determinations.
49
See dkt. 2.
50
Spradley, 686 F.3d at 1193.
51
Dkt. 50 at 11.
52
Id.
53
559 U.S. 506 (2012).
54
Id. at 517.
55
The parties agree that no deferential standard applies to Reliance’s eligibility determinations. See dkt. 46 at 7.
8
Defendants finally argue the court would err if it orders payment when there has been no
decision by the Plan. 56 Defendants’ position evidences a fundamental misunderstanding of the
court’s Order. The court’s Order and Judgment reflects only the relief requested in Carlile’s
Motion for Summary Judgment, which was to conclude Carlile “was an ‘active, full-time
employee’ and thus eligible for benefits.” 57 The court made no determination regarding what
Defendants owe under the terms of the Policy. Any challenge to the court’s Order and Judgment
on that basis are misplaced. To the extent Defendants are challenging Carlile’s continuing
disability, that is not an issue for remand but would involve new proceedings. Defendants
request for remand is DENIED.
V.
Conclusion
For the reasons discussed above, the court DENIES Defendants’ Motion to Alter or Amend
the April 29, 2019 Memorandum Decision and Order, and Judgment in a Civil Case. 58
SO ORDERED this 25 day of July, 2019.
BY THE COURT:
________________________________________
ROBERT J. SHELBY
United States Chief District Judge
56
Dkt. 50 at 10.
57
Dkt. 33 at 15.
58
Dkt. 50.
9
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